- [BREAKING] Cooper Union is Broke
31 Oct 2011 04:00:00 am - 31 Oct 2011 06:51:08 pm
- Last edited by KermMartian on 25 Jan 2012 11:53:06 am; edited 4 times in total
Update 11/8/2011: Coverage from a November 7th meeting with the chairman of Cooper's Board of Trustees has been added.
Update 11/1/2011: Notes from the 10/31 meeting between Pres. Bharucha and faculty/students/alumni have been added at the end of this post.
Update 1/25/2012: Letter from the Alumni Pioneer added at the end of this post.
As an alumnus of The Cooper Union for the Advancement and Art, a small engineering, art, and architecture college in New York City that offers full-tuition scholarships to all students, it is important to me that the school continue to exist and maintain its current prestige for a very long time. I hold a Bachelors of Engineering and Masters of Engineering, both in Electrical Engineering, from the school, acquired over five years of brutal, trial-by-fire suffering at the hands of the extremely rigorous academic program. The school was founded over 150 years ago, in 1859, by wealthy industrialist Peter Cooper, who believed that high-quality education should be "free as air and water". It has maintained a healthy endowment based on Cooper's fortune combined with other funds over the years, including smart real estate choices and safe investment strategies. In 2009, Cooper Union finished building a new building, 41 Cooper Square, which was promoted as important to the school's long-term academic and financial strategy. It reportedly cost somewhere between $167 to just under $200 million, depending on what you believe, although the "sticker" price was $111.6 million. The administration and trustees insisted that the endowment was safe and in excellent shape thanks to intelligent financial decisions.
Fast-forward to a few days ago, when news began to explode across Facebook about rumors that Cooper Union was going to start charging tuition. At first a smattering of individuals mentioned that Cooper was thinking of charging tuition, then as the news spread across Facebook, picking up students, alumni, and faculty along the way, several Facebook groups were created to organize the rumors, news and discussion. In descending order of importance and activity:
:: "Save Cooper Union" Facebook group
:: "Cooper Union: Free as Air and Water" Facebook event/group
:: "Save Cooper Union Without Tuition" Facebook event/group
Amidst the uproar, rumors, promises of future details from the administration, silence from the Board of Trustees, and anger at purported betrayal and mismanagement, the first clue about the bankruptcy of Cooper Union in print media appeared in an article about a bookstore in the same building as the Cooper Union "dorms". In defending its inflexibility in lowering the tenant's rent, a school official said that the school was "broke". Although the article was mysteriously removed from the Daily News website, Google News had a cache of the quote as well as a related Gothamist article:
Today's Daily News had an article more focused on the issue, recapping the currently-known fact, that the school has roughly two years of money left in the endowment, is hemorrhaging money, and has for many years been in much, much worse financial shape than has been revealed or reported:
http://freeasairandwater.net/assets/contributions/z54m6w4wggzk/New_York_Daily_News_Oct_31_Page_3.jpg
Although this isn't really a Cemetech issue per se, I think it's an interesting story, and it's certainly relevant for those of you thinking of pursuing engineering and have been / will / would have been considering Cooper Union as an option. Tonight at 9pm, in about an hour, the school is going to hold an open forum to address the facts and rumors. I will be posting anything I can learn there as soon as I get it.
Edit: The story has hit the New York Times:
http://www.nytimes.com/2011/11/01/nyregion/cooper-union-may-charge-tuition-to-undergraduates.html
Edit #2: A postmortem on the meeting between Pres. Jamshed Bharucha and the Cooper Union community. Starting with some pullquotes from the session:
President Bharucha has promised to immediately form a task force to investigate all possible solutions to the current budget crisis at Cooper Union, made up of alumni, some student representatives, and no trustees, as per the pervasive vilification of the trustees among the attendees. Preliminary page and Twitter account to organize the task force and facilitate exchange of ideas:
:: "Cooper Union Task Force" Facebook page
:: "Cooper Union Task Force" Twitter account
Among the various important items revealed by President Bharucha at the meeting:
:: Most years since 1960 incurred deficits; since 1989, huge gap developed between revenue and expenses.
:: Past year: $16.5 million shortfall on $60 million budget! That's 25%; worst was 1999, which was a 39% shortfall
:: Will need more than $16 million per year to make up shortfall. By 2017, will need a steady additional revenue stream of $27 million to balance budget and begin to re-build endowment
:: Loan on $175 million borrowed for 41 Cooper Square costs Cooper $10 million per year in interest; starting in 2017, another $5 million per year in principal.
:: Current revenue: most comes from real estate holdings. Sources: (1) Chrysler Building rent and tax equivalency; (2) tax equivalence from 26 and (later) 51 Astor Place; (3) Alumni annual fund; (4) Student housing fees; (5) income from endowment
:: Need a sustainable financial model: no more than 5% of endowment (ie, interest, not principal) spent per year
:: The endowment is down to roughly $125 million, of which $50m is the unrestricted endowment. Bharucha stressed that this is gone. In two to three years, that money will be spent, and there's little that can be done to prevent that.
:: Growth? If there were programs that could bring in more funding with minimal Cost, plus strength of academic program, would pursue.
:: Annual giving: ~2.1 million, and only about 18% give. That should go up, but it will not be enough to scale up. Even at 60% alumni schools, only 9% of budget from alumni giving. The alumni cannot be blamed for the crisis by the trustees (although the trustees have publicly tried to do so).
:: Tuition is an option on the table, as a last resort. A tuition plan would involve maintaining free education for those who can least afford it, with some tuition charged for those who can afford it.
Among the major concerns of the audience:
:: Cooper Union, with Peter Cooper's vision of education beings "As free as air and water", would cease to exist anyway if tuition were charged.
:: Why was 41 Cooper Square built? It was marketed as an $80 million project, sticker price was $111.6 million, total cost to actually move was $175 million including the need for additional Foundation Building renovations, hidden costs rumored to push it close to $200 million. Administration had claimed that full cost could be covered with a capital campaign. Only $60 million in directly useable funds for the building were gained, hence the need for a $175 million loan, with the interest from the Chrysler Building as colateral. Many in the audience felt the new building was an unnecessary extravagance, a waste of money, and a detriment to the student body.
:: Why was the issue only revealed now? Where were the trustees and the administration on this ten years ago? Why have the trustees not come forward to explain their lack of oversight?
Finally, a few of the latest developments and pieces of publicity:
:: News articles in the Wall Street Journal, Inside Higher Education, New York Magazine, Gothamist, the Village Voice, and many other blogs and publications.
:: Letter from Pres. Jamshed Bharucha to the Cooper community
:: Letter from the president of the Cooper Union Alumni Association
Edit #3: A branch of the New York Times has covered a November 7th meeting between the chair of Cooper Union's Board of Trustees and students, faculty, and staff. As expected from sentiment on social networking sites, the atmosphere was reportedly combative, with significant blame for Cooper's financial situation placed on the alumni, even while they were requested to increase their contributions to their alma mater:
http://eastvillage.thelocal.nytimes.com/2011/11/08/boos-and-hisses-at-meeting-to-address-cooper-unions-financial-woes
Edit #4, 1/25/2012: I received the following much-appreciated email from the editors of the Alumni Pioneer.
Update 11/1/2011: Notes from the 10/31 meeting between Pres. Bharucha and faculty/students/alumni have been added at the end of this post.
Update 1/25/2012: Letter from the Alumni Pioneer added at the end of this post.
As an alumnus of The Cooper Union for the Advancement and Art, a small engineering, art, and architecture college in New York City that offers full-tuition scholarships to all students, it is important to me that the school continue to exist and maintain its current prestige for a very long time. I hold a Bachelors of Engineering and Masters of Engineering, both in Electrical Engineering, from the school, acquired over five years of brutal, trial-by-fire suffering at the hands of the extremely rigorous academic program. The school was founded over 150 years ago, in 1859, by wealthy industrialist Peter Cooper, who believed that high-quality education should be "free as air and water". It has maintained a healthy endowment based on Cooper's fortune combined with other funds over the years, including smart real estate choices and safe investment strategies. In 2009, Cooper Union finished building a new building, 41 Cooper Square, which was promoted as important to the school's long-term academic and financial strategy. It reportedly cost somewhere between $167 to just under $200 million, depending on what you believe, although the "sticker" price was $111.6 million. The administration and trustees insisted that the endowment was safe and in excellent shape thanks to intelligent financial decisions.
Fast-forward to a few days ago, when news began to explode across Facebook about rumors that Cooper Union was going to start charging tuition. At first a smattering of individuals mentioned that Cooper was thinking of charging tuition, then as the news spread across Facebook, picking up students, alumni, and faculty along the way, several Facebook groups were created to organize the rumors, news and discussion. In descending order of importance and activity:
:: "Save Cooper Union" Facebook group
:: "Cooper Union: Free as Air and Water" Facebook event/group
:: "Save Cooper Union Without Tuition" Facebook event/group
Amidst the uproar, rumors, promises of future details from the administration, silence from the Board of Trustees, and anger at purported betrayal and mismanagement, the first clue about the bankruptcy of Cooper Union in print media appeared in an article about a bookstore in the same building as the Cooper Union "dorms". In defending its inflexibility in lowering the tenant's rent, a school official said that the school was "broke". Although the article was mysteriously removed from the Daily News website, Google News had a cache of the quote as well as a related Gothamist article:
Today's Daily News had an article more focused on the issue, recapping the currently-known fact, that the school has roughly two years of money left in the endowment, is hemorrhaging money, and has for many years been in much, much worse financial shape than has been revealed or reported:
http://freeasairandwater.net/assets/contributions/z54m6w4wggzk/New_York_Daily_News_Oct_31_Page_3.jpg
Although this isn't really a Cemetech issue per se, I think it's an interesting story, and it's certainly relevant for those of you thinking of pursuing engineering and have been / will / would have been considering Cooper Union as an option. Tonight at 9pm, in about an hour, the school is going to hold an open forum to address the facts and rumors. I will be posting anything I can learn there as soon as I get it.
Edit: The story has hit the New York Times:
http://www.nytimes.com/2011/11/01/nyregion/cooper-union-may-charge-tuition-to-undergraduates.html
Edit #2: A postmortem on the meeting between Pres. Jamshed Bharucha and the Cooper Union community. Starting with some pullquotes from the session:
Pres. Bharucha wrote:
"The unrestricted endowment is $50 million as of September, and that is the only pot of money that can be drawn from to cover budget gaps. The unrestricted endowment will be gone in 2 to 3 years."
"It's quite clear that this is the result of an unsustainable financial model that goes back a number of decades."
"Most years since 1960 incurred deficits; since 1989, huge gap developed between revenue and expenses."
"Altering the scholarship policy [charging tuition] will only be a last resort."
"It's quite clear that this is the result of an unsustainable financial model that goes back a number of decades."
"Most years since 1960 incurred deficits; since 1989, huge gap developed between revenue and expenses."
"Altering the scholarship policy [charging tuition] will only be a last resort."
President Bharucha has promised to immediately form a task force to investigate all possible solutions to the current budget crisis at Cooper Union, made up of alumni, some student representatives, and no trustees, as per the pervasive vilification of the trustees among the attendees. Preliminary page and Twitter account to organize the task force and facilitate exchange of ideas:
:: "Cooper Union Task Force" Facebook page
:: "Cooper Union Task Force" Twitter account
Among the various important items revealed by President Bharucha at the meeting:
:: Most years since 1960 incurred deficits; since 1989, huge gap developed between revenue and expenses.
:: Past year: $16.5 million shortfall on $60 million budget! That's 25%; worst was 1999, which was a 39% shortfall
:: Will need more than $16 million per year to make up shortfall. By 2017, will need a steady additional revenue stream of $27 million to balance budget and begin to re-build endowment
:: Loan on $175 million borrowed for 41 Cooper Square costs Cooper $10 million per year in interest; starting in 2017, another $5 million per year in principal.
:: Current revenue: most comes from real estate holdings. Sources: (1) Chrysler Building rent and tax equivalency; (2) tax equivalence from 26 and (later) 51 Astor Place; (3) Alumni annual fund; (4) Student housing fees; (5) income from endowment
:: Need a sustainable financial model: no more than 5% of endowment (ie, interest, not principal) spent per year
:: The endowment is down to roughly $125 million, of which $50m is the unrestricted endowment. Bharucha stressed that this is gone. In two to three years, that money will be spent, and there's little that can be done to prevent that.
:: Growth? If there were programs that could bring in more funding with minimal Cost, plus strength of academic program, would pursue.
:: Annual giving: ~2.1 million, and only about 18% give. That should go up, but it will not be enough to scale up. Even at 60% alumni schools, only 9% of budget from alumni giving. The alumni cannot be blamed for the crisis by the trustees (although the trustees have publicly tried to do so).
:: Tuition is an option on the table, as a last resort. A tuition plan would involve maintaining free education for those who can least afford it, with some tuition charged for those who can afford it.
Among the major concerns of the audience:
:: Cooper Union, with Peter Cooper's vision of education beings "As free as air and water", would cease to exist anyway if tuition were charged.
:: Why was 41 Cooper Square built? It was marketed as an $80 million project, sticker price was $111.6 million, total cost to actually move was $175 million including the need for additional Foundation Building renovations, hidden costs rumored to push it close to $200 million. Administration had claimed that full cost could be covered with a capital campaign. Only $60 million in directly useable funds for the building were gained, hence the need for a $175 million loan, with the interest from the Chrysler Building as colateral. Many in the audience felt the new building was an unnecessary extravagance, a waste of money, and a detriment to the student body.
:: Why was the issue only revealed now? Where were the trustees and the administration on this ten years ago? Why have the trustees not come forward to explain their lack of oversight?
Finally, a few of the latest developments and pieces of publicity:
:: News articles in the Wall Street Journal, Inside Higher Education, New York Magazine, Gothamist, the Village Voice, and many other blogs and publications.
:: Letter from Pres. Jamshed Bharucha to the Cooper community
:: Letter from the president of the Cooper Union Alumni Association
Edit #3: A branch of the New York Times has covered a November 7th meeting between the chair of Cooper Union's Board of Trustees and students, faculty, and staff. As expected from sentiment on social networking sites, the atmosphere was reportedly combative, with significant blame for Cooper's financial situation placed on the alumni, even while they were requested to increase their contributions to their alma mater:
http://eastvillage.thelocal.nytimes.com/2011/11/08/boos-and-hisses-at-meeting-to-address-cooper-unions-financial-woes
Edit #4, 1/25/2012: I received the following much-appreciated email from the editors of the Alumni Pioneer.
Quote:
Came across your posting on the Cemetech Forum about the Cooper Union financial crisis. Although Facebook has managed to crowdsource some good information, I suggest you check out the investigative reporting and analyses at The Alumni Pioneer (link below).
A key problem has been the refusal of Cooper presidents to establish austerity budgets, and the refusal of the Cooper Board of Trustees to force the presidents to do so. Three times since 2006, Cooper presidents have vowed to do so and haven't. The "rising academic costs" are in fact rising administrative costs, as the number of non-academic positions at Cooper continues to grow unabated for a decade.
Assertions by the current Cooper president that Cooper is "cut to the bone" and by the Board chair that Cooper is a "lean ship" are not supported by any facts, and the consequent creation of a Revenue Task Force (after much pressure, the administration promises to create a Expense Reduction Task Force, but the current president's beliefs about what he accomplished at Tufts and his careful qualifiers in all of his speeches and writings indicate that no serious cuts will be made) have focused the conversation of many alumni on the fundraising side.
Barry Drogin EE '83
Publisher, The Alumni Pioneer
http://www.notnicemusic.com/Cassandra/cooper.html
A key problem has been the refusal of Cooper presidents to establish austerity budgets, and the refusal of the Cooper Board of Trustees to force the presidents to do so. Three times since 2006, Cooper presidents have vowed to do so and haven't. The "rising academic costs" are in fact rising administrative costs, as the number of non-academic positions at Cooper continues to grow unabated for a decade.
Assertions by the current Cooper president that Cooper is "cut to the bone" and by the Board chair that Cooper is a "lean ship" are not supported by any facts, and the consequent creation of a Revenue Task Force (after much pressure, the administration promises to create a Expense Reduction Task Force, but the current president's beliefs about what he accomplished at Tufts and his careful qualifiers in all of his speeches and writings indicate that no serious cuts will be made) have focused the conversation of many alumni on the fundraising side.
Barry Drogin EE '83
Publisher, The Alumni Pioneer
http://www.notnicemusic.com/Cassandra/cooper.html
